The British foreign exchange market: a guide

When you think of the financial industry in Britain, the foreign exchange markets often aren’t the first to spring to mind. Many people think of the City of London and all the blue-chip firms within it, for example, while others consider the wide range of hedge funds and other institutions that dominate the investment scene. However, what few people are aware of is that there is actually a large and thriving forex investment scene here: over £2bn worth of foreign currencytrading happens every day in Britain – and this means that there are a whole host of forex investment opportunities to be had.

Britain’s forex market

As mentioned above, Britain’s forex market is one of the largest in the world. With the size of the forex market here being nearly twice as big as that of New York, there is a handy trading infrastructure already set up. As a result, investing in forex in Britain can be a cost-effective and useful move. Fees charged by brokers can be lower as a result of competition, for example, while you will have a larger range of choice thanks to the bigger market shares involved.

The British pound

Forexinvestors in Britain still have a choice of global currencies. Investing in the US dollar is an option, while backing the euro is another. However, if you’re basing your investment activity in Britain, then it makes a lot of sense to consider investing in the British pound. This is especially true if you use fundamental analysis in your trading practice: focusing on the pound means that you’ll have opportunities all around you to learn about the political and economic context, and the market-moving incidents that can occur here.

A range of brokers

However, perhaps the most important thing to note about the market is that there is a whole host of brokers available from which to choose – and that the best brokersare often identified online. The advantage here is that the comparison work is done for you, and you don’t need to sift through a lot of information or do as much research yourself. However, there are also problems with taking the online approach: scam artists do operate online, and you should always protect yourself against them. In Britain, it’s wise to ensure that the broker that you choose is one that is regulated by the Financial Conduct Authority. You can check this out by asking to see your broker’s regulatory documentation, or looking on their website to see if they are compliant.

What’s clear, then, is that the foreign exchange market in Britain is one of the most dynamic – not to mention sizeable – in the world. However, the size of the market isn’t everything: Britain also plays host to one of the most widely traded forex assets, the pound, while there are also plenty of brokers here jostling for business. Investing in Britain’s foreign exchange markets, then, is a smart choice.